This point is not lost on Vermont’s Department of Financial Regulation, who uses the term “banking” liberally throughout its website when refering to the activities of both banks and credit unions. There is an entire “Banking” tab used as a catchall for banks and credit unions. The chief regulator for both banks and credit unions is the Deputy Commissioner of the Vermont Banking Division. Its newsletter is called the “Banking Bulletin.” If you have a complaint about a bank or credit union, you call the “Consumer Banking” hotline.

Instead of referring to itself as a “banking cooperative” – which sounds kind of socialist anyway – it should describe itself as a financial institution started by a bunch of people so fed up with banks that they put their money together and decided to lend and borrow from one another. This is much more honest and informative. And you know what? I am proud of the constitutional stand that the state of Vermont is taking.

The tongue-in-cheek tone of this blog belies an interesting point. Could CUs start using this moment to completely separate themselves from banks in terms of perception? Sure. Will they? Probably not...

Remarkable because it's the opinion of a non-industry insider...just your average Vermont citizen. From the blog:

That you would choose to devote my tax-dollars to suppressing a credit union ad campaign in order to benefit banks is absolutely unconscionable. If you want to protect the consumer, you should be deploying every available resource to monitoring the banks so they don't derail our financial system (and economy) again.

...my goal was to ask 10 individuals that I thought were most likely in the Gen X or Y demographic if they knew what a credit union was. Only 1 of the 10 knew – and do you know why? It turns out that person was an attendee of this particular conference. Then I asked another question of the same group – I wanted to know if anyone knew what a “share-draft” account was. Having told the credit union employee that she was not allowed to answer – absolutely NONE of the remaining 9 had any idea what I was talking about.

An interesting fact-finding mission. Further down, the author talks about using "Coke" interchangably with "Soda" and how many people will as for their favorite drink without regard to brand...just on instinct.

We went looking for the Banking industry's take and found this pretty straight-forward blog from Keith Leggett, VP and Senior Economist at the ABA. The post itself was fine, but the second (anonymous) comment really got our attention.

Must be lean times for any meaningful dialogue on credit unions Dr. Leggett. Can we settle this and agree that the use of the four letter B word should be stricken from the vernacular.

Now there's no way of knowing, but I'm betting there are plenty of people in the banking industry that would agree with this sentiment. Prohibiting CUs from using the word "bank" and its conjucations in marketing would mean CUs would have to do some big-time thinking to come up with a new word or describe their services more efficiently.

Have you seen any other articles on the topic? Let us know (and provide links, if you can) in the comment section.

July 18, 2012

Be careful...someone's trying to prevent you from using the word "banking" to describe your services.

According an article on today's CUJournal.com, Vermont State Employees CU was ordered by state regulators to stop using the words "bank" and "banking" in any communications. And why would this state regulator do such a thing?

I'll give you three guesses.

But the regulator has not changed its position and it is pressing forward, apparently because of continuing complaints from bankers.

Gee, who didn't see that one coming?

This is a crock. What's next? They start saying we're not allowed to use the word "Union" because labor forces complained? How are you supposed to tell people you're "much more than a bank" when you can't say the word "bank"?

In TV commercials and other media, specific advertisers are allowed to call out their competitors by name. How can that be legal and using the word "banking" to describe ONLINE BANKING be worthy of a cease and desist?

This isn't one of those "'Xerox' is not the same as 'photocopy'" cases. Banking isn't the provence of one business providing a service. It's a word that applies to an entire industry, and it should be the right of everyone in that industry to use it - banks, credit unions, trusts, etc.

My thoughts? Maybe we shouldn't get mad...maybe we should get even.

Maybe we start insisting that, due to the nature of our name and in the interest of avoiding market confusion, banks should stop issuing "credit" or "credit cards" or "lines of credit" or "crediting customers' accounts". After all, credit is OUR word, right?

July 10, 2012

When we started this blog, we wanted to call it "CU Soapbox" because it was meant to be a place to stand up and shout about the industry. I've been doing a little "shouting" recently and I thought I'd make it a point to do the same on this blog, because hey, this is the right place, isn't it?

I've done a little reading about a recent Javelin study about big-bank customers and why they want to make the switch to another FI...but don't. The Financial Brand does a great job of making all this digestible and points out one very important piece of information: 40% of surveyed consumers WON'T LEAVE their big bank because of that bank's online/mobile banking service. Do they want to leave? Yes, of course they do. Who wouldn't? Getting beaten by fees and losing a ton of money that you could hang on to would make anyone want to leave...what keeps them hanging on is the illusion of convenience.

I say "illusion" because the kind of technology that would bend the bow in credit unions' favor is out there, and it can be had. We could be courting these on-the-fence big bank customers and their billions in collected assets. Why aren't we?

I believe there are two problems:

We're not promoting the technology/convenience we have and already offer, and

We're not positioning ourselves to bring in the technology that levels the playing field.

I wrote two articles recently that sum up my thoughts on the topic. Go read:

Then, start asking yourself the four major questions that need to be answered, and fast:

Question 1: "Are our current members utilizing the online services we offer, and if not, why?"

The best and easiest research to conduct for yourself is on your own member base. If you have 10,000 members and only 1,000 are using online banking, what could be done to get more people to sign up and start using it? Maybe they already did and it was such an excruciating experience that they swore off of it (I can't imagine that happening, but who knows?). What can you do to make it right?

Websites need updates and overhauls. It comes with the territory. Marketing hates to hear that they have to write new copy and make new graphics and IT hates the hassle of creating and implementing sweeping changes. I have two words for both: tough toenails. If the site needs a face lift, give it one. If it needs a total reboot, give it one. Make it easy for interested outsiders (and undereducated insiders) to get all the information they need.

Audience is everything. If you serve a member base that's always on the move (military, air travel industry, etc.), why not include remote deposit capture and a smartphone app? If you serve a large area that's tough to reach on foot, more drive-thru ATMs make sense, don't they? Don't just throw everything at the wall and see what sticks...make an informed decision for the member.

Question 4: "Who's in charge?"

So often, technological advances and purcahses are made without clear goals in mind, or anyone to enforce them. Set expectations and meet them. It's not difficult and it means there's a person driving these endeavors from the inside.

Final Thought

Did you ever hear the riddle about the frog in the well?

A frog falls into a well, 20 feet deep. Every morning, he wakes up and hops three feet up the side of the well. Every evening, he falls asleep and slides back two feet. How many days does it take him to get out of the well?

The answer: Considering he jumps three feet every day and falls two feet each night, it would take him eighteen days to get within three feet of the top. Then, on the nineteenth day, he'd jump three feet and clear the well. So simple it's complicated, right?

Let's put a CU-spin on this. If a credit union gains ten members a month and loses nine by the end of the month, how long will it take that credit union to compete with Bank of America in terms of sheer numbers?

The answer: You can't compete with BofA on locations. You can't compete on "number of members vs. number of customers". Their product offering is too abundant, their reach is too wide and too far. Where you can compete is on an emotional level -making a lasting impact on your member. You can also compete on member service. You can also compete on rates. You can even compete on technology...provided you're willing to make it happen.